EU rejects Italian budget for breaching debt rules

European News

24 Oct 2018

31

The European Commission has for the first time ever rejected the budget of a member state, as it said the spending plans of Italy's populist government were violating the bloc's debt limit and needed revision.

The EU Commission on Tuesday 23rd October demanded unprecedented changes to the Italian draft budget for 2019, urging the populist government in Rome to bring their spending plans in line with the bloc's fiscal rules.

“Today for the first time the Commission is obliged to request a euro area country to revise its draft budgetary plan,” said EU Vice President Valdis Dombrovskis, adding that the bloc's executive arm saw “no alternative” to the rebuke.

At the same time, Brussels asked Rome to submit a new 2019 draft budget within three weeks, threatening Italy with disciplinary action if it didn't comply with the demand.

The budget standoff between Brussels and Rome has intensified in recent weeks because the Italian government, made up of the anti-establishment 5-Star Movement and the far-right League, insisted on tripling the country's fresh borrowing from 0.8% of GDP to 2.4% next year. However, Brussels argues that the hike would far exceed the spending limits agreed with the EU and further increase Italy's national debt, which is already the highest in the EU.